Regulation

Former E&Y Partner Gets Jail Time

The case was reportedly one of the first cases of document destruction brought under the Sarbanes-Oxley Act.
Stephen TaubJanuary 31, 2005

A former partner of Ernst & Young was sentenced under the expanded powers of the Sarbanes-Oxley Act for tampering with financial documents.

The ex-partner, Thomas Trauger, received a year in prison, two years of supervised release, and a $5,000 fine, according to the Associated Press, which reported that this is one of the first cases of document destruction brought under Sarbox. The AP reported that Trauger, who originally faced up to five years in prison, is slated to surrender into custody on March 30, according to the report.

The 42 year-old accountant was charged with changing and destroying documents in a bid to block a Securities and Exchange Commission probe into the collapse of NextCard Inc., which offered credit cards on the Internet, according to Reuters.

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The SEC investigation found that Trauger did not inform the SEC about changes and deletions for 2001 documents, according to the wire service.

“This is one of the first cases in which an auditor pleaded guilty to destroying key documents in an effort to obstruct a federal investigation,” U.S. Attorney Kevin Ryan reportedly said in a statement.

“Our financial markets depend on the integrity of auditors, lawyers and professionals to do their jobs ethically and fairly,” said Ryan, according to the AP. “The U.S. Attorney’s Office remains committed to prosecuting those professionals who participate in the criminal acts they are charged with uncovering.”

The AP said last week that Trauger could not be reached for comment.